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  • Ken Ilgunas

How to pay off your student debt

(Alternate title: How to pay off $35,000 in student loans in two and a half years)

Recently, a 29-year-old Harvard business school grad has become a media darling for paying off his $90K student debt in seven months. I’ve seen his story pop up in my Facebook feed from people who’ve read articles about him on the Wall Street Journal, Huffington Post, and Yahoo “News.”

I have nothing against the guy—and I do think there are useful things to learn from his experiences—but I think it’s absurd that media outlets have been so quick to share his story, misleading readers into thinking his example might actually help them deal with their debts. The thing is, this guy’s situation is nothing like the average, everyday, student debtor’s situation. Consider, for instance, how he paid off his debt: He rented out rooms in the home he owned (yes owned!), sold excess vehicles sitting in his driveway (yes, “excess!”) and—just one more little thing—he was getting paid over $100,000 a year (yes, $100,000 a year!). How many 29 year olds have homes AND excess vehicles AND six figure salaries?! One percent? One tenth of one percent?

His video:

His story might in fact be useful for Ivy League grads who make $100K+ a year, who have excess vehicles sitting in their driveway, who have 401Ks they can momentarily put on hold, and who ought to undergo a period of serious self-examination to come to terms with psychotic consumerist habits, but for everyone else, his advice just doesn’t apply.

So, while I am mostly tradeless, talentless, useful-skill-less, I am, however, a self-avowed expert at one thing, and that’s paying off student debt. As an everyday anybody with a worthless liberal arts degree from a state school—and no seedy uncles to hook me up with lucrative jobs—let me share a few tips on how I paid off $35,000 in student loans in 2.5 years by working mostly low-wage jobs.

1. Think of your debt as a sworn enemy, and indebtedness as a life and death situation. I know that sounds extreme, but grand feats require grand thinking, not to mention a little bit of insanity. If you aim to put 10%, or 20%, or even 50% of your monthly income toward your debt, you’re not taking the conundrum you’re in seriously enough. You should be doing everything (without sacrificing your health) to put 100% of your monthly income toward your debt. When you can do that, even humungous unmanageable debts will shrink and become manageable.

2. Get rid of your vehicle. Article One in Ilgunas’ Law of Cheapness is: Don’t own a vehicle. The average American household spends about $8,000 per year on all vehicle costs, which will probably be 1/3 of many graduates’ salaries. Not only will vehicle costs cut away a huge slice of your yearly salary, but the vehicle itself will severely hamper your ability to take a series of low-wage room and board jobs at remote camps across the country, which is, I would argue, the ideal way to quickly pay off your debt. (Exception: If you are getting a vehicle to also function as your home, the costs of maintaining the vehicle, in this case, I would argue, are reasonable.)

3. Do everything you can to reduce food and shelter costs. In fact, it would be best to eliminate them altogether. You can do this by getting a camp job—most of which offer free room and board. You’ll be getting paid very little (probably no more than $10/hour, if that), but if you calculate what you’re not spending on food, room, and transportation (which you won’t need to pay for at these camp jobs), you might as well assume you’re getting paid more like $20-25/hour. The work at most of these camps is pretty grueling, require long hours, and the labor is fairly menial, but there is the opportunity for promotion. For instance, I started working as a maid at a truck stop in Coldfoot ($8/hour), got a promotion to be a tour guide the following summer ($9/hour plus tips). Then I used my guiding and recreational hiking experiences in the arctic to persuade the Park Service to hire me as a backcountry ranger ($20/hour). But even before I was getting paid the healthy ranger salary, I was making $18,000 a year as a tour guide in the summer and cook in the winter. All that money went toward my debt because I had no room, board, or transportation costs. (For camp jobs, I recommend

4. Remember, this is a life or death situation. Your freedom is on the line. You’re sacrificing your precious twenties trying to aimlessly climb office hierarchies and corporate ladders. You’re hardly putting anything toward your debt because you must pay to maintain the appearance of a prosperous, up-and-coming professional, car and clothes and apartment costs and all. If your life really was on the line, what would you do? You would probably resort to desperate measures. You’d become a depression era tramp, traveling via freight train and taking jobs and food wherever you could get them. You’d hitchhike instead of spend $800 on airfare. You’d wrest otherwise costly meals from Dumpsters. You’d live in a van and survive on $103/week. Get obsessed with your debt. Hate it. Despise it. Anthropomorphize it. Murder it. Don’t think like a “young professional.” Think like a tramp.

5. Find a way to stop paying interest. Interest is a tumor, a quiet killer that grows in your bank account without you hardly knowing it. The best and perhaps only way to deal with interest is to go on a ruthless, full-out, no-holds-barred, take-no-prisoners offensive against your debt immediately, blitzkrieging it with payments in order to paralyze your debt before it paralyzes you. So, use speed and power and force against your debt. But also take advantage of any situation you can. My mom, for instance, had a zero-interest credit card. She put my whole “private debt” (which was $18,000) on her credit card, and I steadily paid her back. This was ideal for me because—on her credit card—interest no longer accrued. And it didn’t cost her a thing. This situation may not be available to everybody (and I’m actually unsure about the legality of it), but take advantage of like situations if you can.

I’m actually thinking about writing a short, how-to survival guide about getting out of debt (with my friend Josh who’s just about paid off his $70,000 debt), so if you have any tips/ideas that you’d like to share, please do!

(As a maid, cook, and tour guide (my moment of shame as a guide is captured above), I saved $18,000 in one year on a $9/hour salary. All room and board and transportation costs were covered. I had no cell phone bill or any needful expenditures except a few articles of clothing.)
(I've hitchhiked over 8,000 miles. The only cost you can expect to pay while hitchhiking is food (plus camping gear, which I wouldn't consider a cost since it could be used for other money-saving endeavors). On my 5,500 trip from Alaska to New York, I paid approximately $200, which probably could have been a lot less if I didn't splurge at restaurants along the way.)
(I made $300/week for five months as a corpmember for an AmeriCorps trail crew in Mississippi. Despite the low wage, I was able to save serious money because room and board was provided, plus I received about $2,000 extra in the form of an "education award," which was given to corpsmembers to put toward tuition/debt.)
(No, this is not a YMCA Halloween costume. As a ranger I got paid the absurd amount of $20/hour through the May-September season, which helped me put an end to my debt. Given the nature of the job, I had few transportation costs, and the government-provided housing was very cheap.)
(I lived in my van after paying off my debt, but it's still a useful example of frugal living and this style of living can be applied to getting out of debt. I lived on $103/week for much of my experiment, paying about $4.34 on food a day.)

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